Plains GP (NYSE: PAGP) and Holly Energy Partners (NYSE:HEP) are both mid-cap oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.
This is a breakdown of recent ratings and price targets for Plains GP and Holly Energy Partners, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Holly Energy Partners||3||4||0||0||1.57|
Plains GP pays an annual dividend of $1.20 per share and has a dividend yield of 5.6%. Holly Energy Partners pays an annual dividend of $2.60 per share and has a dividend yield of 9.5%. Plains GP pays out 184.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Holly Energy Partners pays out 147.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Plains GP has increased its dividend for 3 consecutive years and Holly Energy Partners has increased its dividend for 14 consecutive years. Holly Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares Plains GP and Holly Energy Partners’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Plains GP||$26.22 billion||0.13||-$731.00 million||$0.65||33.17|
|Holly Energy Partners||$454.36 million||6.31||$195.04 million||$1.76||15.48|
Holly Energy Partners has lower revenue, but higher earnings than Plains GP. Holly Energy Partners is trading at a lower price-to-earnings ratio than Plains GP, indicating that it is currently the more affordable of the two stocks.
This table compares Plains GP and Holly Energy Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Holly Energy Partners||42.93%||35.81%||8.81%|
Risk & Volatility
Plains GP has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, Holly Energy Partners has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500.
Insider & Institutional Ownership
84.2% of Plains GP shares are owned by institutional investors. Comparatively, 28.8% of Holly Energy Partners shares are owned by institutional investors. 39.9% of Plains GP shares are owned by company insiders. Comparatively, 0.8% of Holly Energy Partners shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Holly Energy Partners beats Plains GP on 9 of the 17 factors compared between the two stocks.
Plains GP Company Profile
Plains GP Holdings, L.P. owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (NGL), natural gas and refined products. The Company operates through three segments: Transportation, Facilities, and Supply and Logistics. Through its three business segments, the Company is engaged in the transportation, storage, terminaling and marketing of crude oil, NGL and natural gas. The Transportation segment operations consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. The Facilities segment operations consist of fee-based activities associated with providing storage, terminaling and throughput services for crude oil, refined products, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. The Supply and Logistics segment operations consist of the merchant-related activities.
Holly Energy Partners Company Profile
Holly Energy Partners, L.P., (HEP) is engaged in the business of operating a system of petroleum product and crude pipelines, storage tanks, distribution terminals, loading rack facilities and refinery processing units in West Texas, New Mexico, Utah, Nevada, Oklahoma, Wyoming, Kansas, Arizona, Idaho and Washington. The Company operates through segments, including pipelines and terminals segment and a refinery processing unit segment. As of December 31, 2016, its pipelines and terminals segment consisted of 24 main pipeline segments; Crude gathering networks in Texas and New Mexico; 10 refined product terminals; one crude terminal; 8,300 track feet of rail storage located at one facility; seven locations with truck and/or rail racks, and Tankage at all six of HollyFrontier Corporation’s (HFC’s) refining facility locations. As of December 31, 2016, the Company’s refinery processing unit segment consisted of five refinery processing units at two of HFC’s refining facility locations.
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